On December 5, 2014, the United States Supreme Court granted certiorari in Commil USA, LLC v. Cisco Systems, Inc. to determine whether the U.S. Court of Appeals for the Federal Circuit erred in holding that a defendant’s “good-faith” belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b). Section 271(b) states that “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” 35 U.S.C. 271(b).

Commil USA, LLC (“Commil”) developed and patented technology that allows wireless devices to move through a communication network, for example, between wifi spots or base stations, without signal interruption. Commil filed suit against Cisco alleging that Cisco’s wifi products directly infringed its patent, and that Cisco had induced others to infringe its patent. The trial court found that Cisco had directly infringed the patent, but did not find Cisco liable for inducing third parties to infringe.

Commil filed and won a motion for new trial on the issue of induced infringement. In the second trial, the jury ruled in favor of Commil on the issue of induced infringement. During the second trial, Cisco was prevented from introducing evidence related to Cisco’s good-faith belief that the Commil patent was invalid. Cisco appealed, and the Federal Circuit found that Cisco should have been allowed to introduce evidence of its good-faith belief that the Commil patent was invalid. Both parties appealed to the United States Supreme Court, which ultimately granted certiorari on the sole issue of whether a party’s good-faith belief that a patent is invalid will operate as a defense to a finding of inducement, thereby relieving that party of liability for infringement. Click here for source.

The resolution of this issue by the Supreme Court is important in that it could eliminate liability of a party that encourages third parties to act in a manner that infringes a patent, even in instances where the actions of the third parties infringe the patent. However, until this case is decided, it is unclear whether even an opinion of counsel that a patent is invalid would protect a party against a finding of inducing infringement in instances where the patent is found to be valid.

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 488-8146. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

Over the last decade an increasing number of businesses have been plagued by the activities of patent assertion entities, commonly known as “patent trolls.” Simply put, a patent troll is an entity that exploits patent rights it has acquired, not by practicing the patent (e.g., by actually using the patented technology), but instead by collecting licensing fees from parties the patent troll alleges has infringed the patent. Indeed, hundreds, if not thousands of companies have encountered patent trolls, such as, Acacia Research Corporation, in recent years.

Recently, the activities of one such patent troll, MPHJ Technology Investments, resulted in an action by the Federal Trade Commission (FTC). Through investigation of MPHJ, the FTC determined that MPHJ had sent more than 15,000 cease and desist letters to small businesses around the country alleging the infringement of patents that involved scanned documents that were then emailed. The letters demanded a hefty licensing fee of $1,000-$1,200 per employee, and further warned that if the business did not comply with MPHJ’s demands, it would face a lawsuit. The letters further represented that there had already been substantial licensing of the patents, in some instances, referencing specific amounts of the licensing fees that were allegedly paid.

The FTC order was directed to the sole executive of MPHJ, Jay Mac Rust, and a local Georgetown, Texas law firm Farney Daniels. The FTC contends that Farney Daniels stood to profit from a percentage of any license fees paid. Rust allegedly purchased a handful of patents from the prior owner, another “patent troll”, and began asserting the patents by demanding licensing fees. After state consumer protection regulators in New York, Vermont, and elsewhere began responding to complaints about the company, the FTC began an investigation into MPHJ’s activities. The result was the FTC’s disclosure that it intended to file an administrative complaint against MPHJ alleging deceptive trade practices under Section 5 of the FTC Act.

The basis of the FTC’s allegations of deceptive trade practices originates from the cease and desist letters sent by MPHJ. The FTC alleged that MPHJ had no intention of actually suing the companies, and that MPHJ did not enter into prior patent licensing agreements as it represented in the letters. Accordingly, the FTC alleged that MPHJ was engaged in deceptive business practices in violation of the FTC Act. In response, in January 2014, MPHJ filed a suit against the FTC in the U.S. District Court for the Western District of Texas alleging, inter alia, that under the First Amendment, it had the Constitutional right to assert its patents on the grounds of free speech, and was obligated to do so to protect its patent rights.

Last month, the FTC announced that it had reached an undisclosed settlement with MPHJ. The proposed consent order sets forth an agreement by MPHJ, Farney Daniels, and MPHJ’s owner, Jay Mac Rust, to refrain from making deceptive representations when asserting patent rights, including the making of “false or unsubstantiated representations that a patent has been licensed in substantial numbers or has been licensed at particular prices.” The proposed order further prohibits misrepresentations regarding the initiation and imminence of a lawsuit. According to a New York Times article, MPHJ contends that “Under the agreement, MPHJ continues to have the right to enforce its patents by contacting companies suspected of infringement, and there is no restriction impairing MPHJ’s right to enforce its patents.”

To date, only two companies have reportedly paid MPHJ’s licensing fees. And perhaps that fact best demonstrates why businesses contacted by a patent troll are well advised not assume the worst, but instead, should calmly seek the advice of experienced intellectual property counsel.

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 488-8146. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

The Federal Circuit has ruled in IRIS Corp. v. Japan Airlines Corp. that the federal government may be liable for infringement in a patent infringement suit, when the infringement is at the direction of the federal government. The case involved a patent infringement suit brought by IRIS Corp. against Japan Airlines (JAL). IRIS alleged that JAL infringed its patented method of making secure identifications using passports embedded with RFID chips when the airline scanned passenger passports with such embedded chips at U.S. airports, notably JFK Airport in New York. JAL asserted that pursuant to Title 28 U.S.C. Section 1498(a), the airline was exempt from any liability associated with scanning requirements, because by federal law, the U.S. government required it to scan passenger passports. Title 28 U.S.C. Section 1498(a) provides that when the alleged infringement is “by or for the United States” and the alleged infringement occurs “with authorization or consent” of the federal government, the patentee may bring action in the Court of Federal Claims. JAL further asserted that IRIS’s only recourse for damages for the alleged infringement would be to bring a lawsuit against the federal government.

The U.S. District Court for the Eastern District of New York agreed with JAL, dismissing IRIS’s complaint against JAL, and the Federal Circuit affirmed that decision. The Federal Circuit reasoned that the federal government assumed liability under 28 U.S.C. Section 1498(a) because JAL could not operate in the United States without infringing the IRIS patents, and it had also benefited from the airline’s alleged infringing activities by improved national security, reduced passport fraud, and lowered overall demand on federal government resources in protecting airline passengers and national security. In the words of the Federal Circuit, “the government benefits here because JAL’s examination of passports improves the detection of fraudulent passports and reduces demands on government resources.”

The IRIS decision has the potential to impact any business that contracts with the government, or carries out government functions, including in the transportation, shipping, security, information technology, natural resources extraction, and other sectors. Government contractors and any other business in a heavily regulated industry should be aware of the potential for raising a Title 28 U.S.C. Section 1498(a) defense in the event of alleged patent infringement.

If you have questions about patent infringement, you need an experienced attorney. Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 488-8146. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

The completion of the Human Genome Project at the beginning of this century, which mapped all the genes in the human body, offered scientists and researchers the opportunity to determine the characteristics of many genes and their relationships to certain diseases. The vast investment of resources necessary to conduct this research prompts those undertaking such painstaking scientific inquiry to secure patent protection for their discoveries. The Supreme Court decision in Association for Molecular Pathology v. Myriad Genetics, Inc., et al., 133 S.CT. 2107 (2013)issued last year further defines the subject matter that is eligible for patent protection and that which is not.

The pharmaceutical company, Myriad Genetics, Inc., through considerable effort, discovered the precise location and sequence of two human genes, BRCA1 and BRCA2, mutations of which can substantially increase the risks of breast and ovarian cancer. Myriad filed, and received, various patents for its discovery. The patents were directed, in part, to naturally occurring segments of deoxyribonucleic acid (DNA) obtained merely through the isolation of the DNA segments, wherein the segments contained genetic code identical to genetic code residing in the DNA segments prior to their isolation.

The patents were also directed to the isolation of synthetic DNA, known as complementary DNA (cDNA), which was created by removing certain nucleotides from a segment of DNA. As the owner of these patents, Myriad could prevent others from conducting diagnostic tests to determine the risk of breast and ovarian cancer in an individual. Myriad refused to license these patents, and thus, controlled this type of diagnostic testing, that is, until the Supreme Court decision.

Section 101 of the Patent Act provides that “whoever invents or discovers any new and useful….composition of matter, or any new and useful improvement thereof, may obtain a
patent therefor, subject to the conditions and requirements of this title.” 35 U.S.C. §101. With respect to Section 101 the Supreme Court noted that “[w]e have ‘long held this provision contains an important implicit exception[:] Laws of nature, natural phenomena, and abstract ideas are not patentable.'” Natural phenomena are the tools of
scientific investigation not the products of creative development which patents are intended to protect.

The issue presented was whether Myriad’s discoveries were ‘new and useful …composition of matter’ or simply a naturally occurring phenomena, and thus, simply an attempt to patent life. The Supreme Court ruled that the discoveries of genes
identified by merely segmenting a tiny portion of the naturally occurring DNA strands does not constitute a patentable invention; however, the creation of complementary DNA is
entitled to patent protection because it is not a “product of nature”, but rather, constitutes a composite containing sequences of nucleotides that are not naturally
occurring, and thus, is subject matter which is eligible for patent protection. It will be interesting to see how this ruling will be applied in other biotechnology inventions.